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Sweden agrees to guarantee Saab loan but asks EU and European Investment Bank

By Elizabeth Haggar for CEOWORLD Magazine Updated:October 6, 2009

Sweden has decided to guarantee the 4.3 billion crown ($610 million) loan that ailing car maker Saab has asked the European Investment Bank and European Commission to assess whether proposed loan guarantees to Saab Automobile would break rules on state support.

A spokeswoman for Swedish Industry Minister Maud Olofsson said the government sent a notification to Brussels on Friday regarding 400 million euros ($585 million) of guarantees being considered for loans from the European Investment Bank.

The loan is key to plans by Swedish luxury car maker Koenigsegg to buy Saab from General Motors GM.UL.

Koenigsegg, backed by U.S. and Norwegian investors, struck a preliminary acquisition deal earlier this year, but concerns have continued to surface over whether it has the financial muscle to buy and run Saab.

Koenigsegg has said it aimed to finalize the purchase by the end of October.

If the commission does not have any objections, the EIB board can review Saab’s loan application, the report said.

Saab’s current owner, US group General Motors (GM), earlier this year said it planned to shed the Swedish subsidiary.

A consortium structured around a low-volume Swedish sportscar maker, the Koenigsegg Group, is hoping to buy Saab. The consortium recently announced plans to include Beijing Automotive Industry Holdings (BAIC) as a minority owner.

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